Breaking News: Target Takes Aim at The Last Mile

Breaking News: Target Takes Aim at The Last Mile

On Wednesday, retail giant Target announced plans to buy Shipt, a same-day grocery delivery service based in Alabama, for a reported $550 million. It’s Target’s latest move towards serving the burgeoning “shop online, receive same-day” retail market.

In some ways, Target is already playing catchup as retailers try to capture the last-mile component of the consumer supply-and-fulfillment chain. According to fulfillment software developer, Temando, four out of five online shoppers would like same-day shipping. Walmart and Amazon have already made big moves into this space, both through acquisitions and with internal initiatives.

Read More: How Retail Won the Last Mile

Earlier this year, Target said that they would invest $7 billion over the next three years, hoping to add $1 billion in profits by “putting digital sales first.” The acquisition of Shipt is integral to their efforts to use their physical locations as “hyperlocal distribution centers,” leveraging backroom space as holding pens for local orders.

An analysis from Bloomberg puts it well: “The question for traditional retailers is how to handle all those internet orders. They could build their own delivery network, but it’s an arduous and expensive process. That’s why many of them are seeking help from e-commerce startups like Shipt and Instacart.”

Our Take: Although the Target-Shipt acquisition is big news, it will hardly be the last deal in the convergence of retail, e-commerce, and fulfillment. In 2018, watch for more acquisitions, more investments (like the one we saw in Flexport), and more technology initiatives. If you’re a freight forwarder, or otherwise involved in the logistics industry, it’s important to analyze exactly what these developments mean for your slice of the pie. We continue to believe that the role of freight forwarders is more valuable than ever, and we’ll continue to offer our insights as the trend continues.

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By: Petere Pamela on Dec. 14, 2017, 1:30 p.m.